Medium-term management initiative Cs+ for Tomorrow 2021 December 2019 Asahi Kasei Corporation
Outline 1. Review of “Cs for Tomorrow 2018” and business environment 2. Vision and goals 3. Medium-term management initiative “Cs+ for Tomorrow 2021” 2 2
1. Review of “Cs for Tomorrow 2018” and business environment 3 3
1. Review of “Cs for Tomorrow 2018” and business environment (1) Financial results Profit growth achieved during previous initiative, with operating income at new record high exceeding the target Cs for Tomorrow 2018 FY2018 15–18 target FY2015 FY2016 FY2017 FY2018 annual announced growth (¥ billion, unless otherwise specified) Apr. 2016 Net sales 1,940.9 1,883.0 2,042.2 2,170.4 2,200.0 Operating income 165.2 159.2 198.5 209.6 8.3% 180.0 Operating margin 8.5% 8.5% 9.7% 9.7% 8.2% EBITDA 1 274.8 268.4 311.9 313.6 4.5% 300.0 Profitability EBITDA margin 14.2% 14.3% 15.3% 14.5% 13.6% Net income 91.8 115.0 170.2 147.5 110.0 EPS ( \ ) 66 82 122 106 17.2% 78 ROIC 2 7.9% 7.8% 9.7% 8.8% 7.0% Capital Net income per shareholders' efficiency 8.6% 10.5% 14.0% 11.1% 9.0% equity (ROE) Dividends per share ( \ ) Shareholder 20 24 34 34 Total return ratio 30.4% 29.1% 27.9% 39.0% 35.0% returns Financial D/E ratio 0.43 0.35 0.23 0.31 0.50 health Exchange rate ( \ /$) 120 108 111 111 110 1 Operating income, depreciation, and amortization (tangible, intangible, and goodwill) 4 4 2 (Operating income − income taxes) / average annual invested capital
1. Review of “Cs for Tomorrow 2018” and business environment (2)-1 Capital expenditure Continuous proactive investment including M&A, accelerating growth For Tomorrow 2015 Cs for Tomorrow 2018 (FY) 2011 2012 2013 2014 2015 2016 2017 2018 250 ≈¥180 billion/year 200 (¥ billion) CAPEX 150 ≈¥110 billion/year excluding large M&A 100 50 0 + + ≈¥450 billion Large ≈¥120 billion ZOLL in 2012, Polypore in 2015 Sage in 2018 M&A 3-year total ≈ ¥670 billion Total 5- year total ≈¥1 trillion Annual average Annual average ≈¥200 billion ≈¥220 billion Note: Figures on decision-adopted basis 5 5
1. Review of “Cs for Tomorrow 2018” and business environment (2)-2 Capital expenditure: target markets Investments centered on key fields such as Automotive and Environment/Energy Health Care & Automotive Hygiene Major investments: Major investments: • Capacity expansion of • Capacity expansion for spinning for Planova virus Lamous microfiber suede removal filters • Capacity expansion for S- • Augmenting pharmaceutical SBR for fuel-efficient tires product pipeline • Acquisition of Sage Investments ¥150 • Capacity expansion of Automotive Interiors, Inc. spunbond for disposable of ≥¥1 billion billion • Acquisition of Swedish gas diapers ¥30 Total ≈¥400 billion sensor module maker Senseair AB billion (decision-adopted basis) Homes ¥40 billion Major investments: Environment/ ¥85 • Capital alliance with Australian billion Energy home-builder McDonald Jones Homes Pty Ltd • Acquisition of US supplier of Major investments: pre-fabricated building • Capacity expansion for Li-ion products Erickson Framing 3/4 of large investments battery separator Operations LLC • Capital alliance with Mori- Gumi Co., Ltd. Note: Figures by field are approximate 6 6
1. Review of “Cs for Tomorrow 2018” and business environment (3) Business Environment Expectations for sustainability; changing industrial structure Marine plastic Greenhouse gas 100-year life Explosive population growth Diversity Industry 4.0 Changing trade environment Mobility-as-a-Service 7 7
2. 旭化成が目指す姿 2. Vision and goals 8 8
2. Vision and goals (1) Sustainability for Asahi Kasei Contributing to sustainable society Providing solutions to the world’s challenges High profitability Business Internal and external Return to development; → connections/dialogue stakeholders Innovation Sustainable growth of corporate value Sincerity, Challenge, Creativity 9 9
2. Vision and goals (2) Portfolio transformation Contributing to Vision of founder Shitagau Noguchi “As industrialists, we must be sustainable society cognizant that, to improve the living standard, our ultimate mission is to contribute to people by supplying abundant highest- Grasping social needs, quality daily necessities at the dynamic portfolio transformation, lowest prices.” developing business that makes life better —1933 Diversity Social need: Acceleration Higher standard of living & of globalization in developing countries Capability Const. mat./homes Social need: to Comfort and Healthcare convenience Electronic devices/materials change Social need: Abundance Petrochemicals/synthetic fibers of goods Social need: Establishment of Chemical fertilizer/regenerated fiber/explosives livelihood base 1920s 1970s 2000s 1950s 10 10
2. Vision and goals (3) Priority fields for provision of value Contributing to sustainable society Challenges Environment Innovation Longevity and needs Contributing to life and living Group Mission for people around the world Enabling “living in health and comfort” and Group Vision “harmony with the natural environment” Material Homes Health Care Priority fields for Life Home Health Environment Mobility provision Material & Living Care & Energy of value Reduced Safety and Comfort and Security and Healthy burden comfort convenience fulfillment longevity 11 11
2. Vision and goals (4) How we create value Material Homes Health Care Priority Health Environment Life Home fields for Mobility provision Care & Energy Material & Living of value Portfolio of high-profitability and high value-added businesses Global No. 1 — One-of-a-kind — High earnings Business portfolio New business transformation creation Business platform Means Allocation of Diverse technology management M&A resources Market/customer alignment CVC/open Digital transformation Capability to change innovation 12 12
2. Vision and goals (5) Approach to realize sustainable society Reducing Solutions to plastic greenhouse gas issues (GHG) emissions • Reduce, Reuse, Recycle • Elucidating the • Expanding businesses mechanism of that help reduce GHG microplastic formation emissions • Sharing issues • Reduced emissions from our own production processes Proactive measures, not only alone but also in concert with other companies and associations 13 13
3. Medium-term management initiative 2. 旭化成が目指す姿 “Cs+ for Tomorrow 2021” 14 14
3. Medium-term management initiative “Cs+ for Tomorrow 2021” (1) Stance for “Cs+ for Tomorrow 2021” Care for People Care for Earth 15 15
3. Medium-term management initiative “Cs+ for Tomorrow 2021” (2) Concept Contributing to sustainable society Contributing to life and living Group Mission for people around the world Life Home Health Environment Priority fields for Mobility Material & Living Care provision of value & Energy C are for People, C are for Earth New “C” Employee action principles Creating new value C ompliance C ommunication C onnect “Cs” in CT2018 C hallenge Diversity & Capability to change Strengths 16 16
3. Medium-term management initiative “Cs+ for Tomorrow 2021” (3) Financial objectives Sustainable profit growth exceeding global GDP growth → “Portfolio of high -profitability and high value-added businesses” 500 3,000 Next stage 3,000 Operating income Net sales Operating margin ≥10% 2,400 2,500 Operating income (¥ billion) 400 New target EBITDA margin ≥¥300 billion ≥16% Operating margin Net sales (¥ billion) 10% 2,000 EBITDA margin Operating income 300 15% ¥240 billion 1,500 209.6 198.5 200 165.2 159.2 1,000 100 500 0 0 2021 2025 2015 2016 2017 2018 (FY) target outlook Note: Exchange rate assumptions are ¥110/$ and ¥130/€ 17 17
3. Medium-term management initiative “Cs+ for Tomorrow 2021” (3) Financial objectives: performance metrics 18–21 FY2021 FY2025 FY2015 FY2018 annual target outlook ( ¥ billion, unless otherwise specified) growth Net sales 2,400.0 3,000.0 1,940.9 2,170.4 ≥ 300.0 Operating income 240.0 4.6% 165.2 209.6 ≥ 10.0% Operating margin 10.0% 8.5% 9.7% EBITDA 1 ≥ 480.0 370.0 5.7% 274.8 313.6 Profitability ≥ 16.0% EBITDA margin 15.4% 14.2% 14.5% Net income 180.0 91.8 147.5 EPS ( \ ) 130 7.2% 66 106 ROIC 2 9.0% Aiming for 7.9% 8.8% Capital FY2021 level or efficiency Net income per shareholders' equity (ROE) 11.1% 8.6% 11.1% above ≈ 0.5 Financial health D/E ratio 0.43 0.31 Exchange rate ( ¥ /$) 120 111 110 1 Operating income, depreciation, and amortization (tangible, intangible, and goodwill) 2 (Operating income − income taxes) / average annual invested capital 18 18
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